Cadence Design Systems (NASDAQ:CDNS) Reports 22% Q3 Revenue Growth, Raises 2026 Guidance as Shares Advance Premarket

Cadence Design Systems (NASDAQ:CDNS) shares advanced in premarket trading on Tuesday after the chip-design software company reported third-quarter earnings and revenue above analyst expectations and increased its full-year 2026 financial guidance.

The stock traded at $329.45 before the opening bell, representing a 2.26% increase from Monday’s closing price of $322.17.

Cadence reported adjusted earnings of $2.11 per share for the third quarter, exceeding the analyst consensus estimate of $2.04. Revenue increased 22% year over year to $1.63 billion, compared with $1.34 billion in the corresponding period of 2025 and ahead of market expectations of $1.61 billion.

The company cited demand for artificial intelligence-driven semiconductor design tools as a factor supporting its financial performance.

Cadence Raises Full-Year Revenue and Earnings Forecasts

Following its third-quarter results, Cadence increased its 2026 revenue growth outlook to 21% and revised its annual financial projections.

The company now expects full-year revenue between $6.387 billion and $6.417 billion, representing a midpoint of $6.402 billion. This compares with the analyst consensus estimate of $6.323 billion.

Cadence also raised its adjusted earnings per share guidance to a range of $8.37 to $8.43, with a midpoint of $8.40, compared with the market consensus of $8.15.

The revised forecasts reflect management’s updated expectations for the remainder of the financial year.

Chip Design Software and Intellectual Property Revenue Increase

Cadence reported year-over-year revenue growth across its principal business segments during the third quarter.

Revenue from its core chip design software operations increased 20% compared with the corresponding period of 2025.

The company’s intellectual property business recorded a 24% revenue increase, while system design and analysis revenue rose 30%.

Recurring revenue advanced 18% year over year, contributing to the company’s overall quarterly revenue growth.

Cadence also reported record quarterly performance in its hardware business and growth in cloud-based offerings.

The results reflect increased revenue across the company’s software, intellectual property, system design and hardware activities.

Order Backlog Reaches $8.2 Billion

Cadence reported a record order backlog of $8.2 billion at the end of the third quarter.

Of that amount, the company expects approximately $4.2 billion to be recognized as revenue over the next 12 months.

The backlog represents contracted business that has not yet been recorded as revenue, with the expected recognition schedule providing information about the company’s anticipated future revenue.

The reported backlog accompanies the company’s updated full-year revenue forecast and growth across its operating segments.

Cadence Authorizes Additional $2.5 Billion in Share Repurchases

Cadence repurchased $400 million of its shares during the third quarter as part of its capital allocation activities.

The company’s board of directors also authorized an additional $2.5 billion for share repurchases.

The new authorization increases the amount available for future buybacks, although the announcement does not specify the timing of purchases under the additional authorization.

The repurchase activity was reported alongside the company’s quarterly financial results and revised annual guidance.

Investors Assess Revised Guidance and Revenue Growth

Cadence’s third-quarter results included revenue growth of 22%, adjusted earnings above analyst expectations and increases across its core operating segments.

The company also reported an $8.2 billion backlog, including $4.2 billion expected to convert into recognized revenue over the next year.

Its revised 2026 guidance calls for revenue between $6.387 billion and $6.417 billion and adjusted earnings per share between $8.37 and $8.43.

Shares rose 2.26% in premarket trading following the announcement, with investors assessing the updated forecasts, demand for semiconductor design tools and the company’s additional $2.5 billion share repurchase authorization.

Cadence Design stock price